Introduction
Since a long time, there had been a growing demand for step-by-step guidance on share market concepts. The foremost questions that trouble the beginners are; where to begin and what to learn first. The good news is, this book will help you resolve all your doubts and misconceptions.
Why should one invest?
One needs to invest to: earn return on your idle resources generate a specified sum of money for a specific goal in life make a provision for an uncertain future One of the important reasons why one needs to invest wisely is to meet the cost of Inflation. Inflation is the rate at which the cost of living increases. The cost of living is simply what it costs to buy the goods and services you need to live. Inflation causes money to lose value because it will not buy the same amount of a good or a service in the future as it does now or did in the past. For example, if there was a 6% inflation rate for the next 20 years, a Rs. 100 purchase today would cost Rs. 321 in 20 years.
This is why it is important to consider inflation as a factor in any long-term investment strategy. Remember to look at an investment’s ‘real’ rate of return, which is the return after inflation. The aim of investments should be to provide a return above the inflation rate to ensure that the investment does not decrease in value. For example, if the annual inflation rate is 6%, then the investment will need to earn more than 6% to ensure it increases in value. If the after-tax return on your investment is less than the inflation rate, then your assets have actually decreased in value; that is, they won’t buy as much today as they did last year.
There are many types of Trader in Market
> Swing Trader
> Intraday Trader
> Momentum Trader
> Scalping Trader
> Fundamental Trader
What care should one take while investing?
Before making any investment, one must ensure to:
- obtain written documents explaining the investment
- read and understand such documents
- verify the legitimacy of the investment
- find out the costs and benefits associated with the investment
- assess the risk-return profile of the investment
- know the liquidity and safety aspects of the investment
- ascertain if it is appropriate for your specific goals
- compare these details with other investment opportunities available
- examine if it fits in with other investments you are considering or you have already made
- deal only through an authorised intermediary
- seek all clarifications about the intermediary and the investment
- explore the options available to you if something were to go wrong, and then, if satisfied, make the investment.
These are called the Twelve Important Steps to Investing.
Fake Attraction Of Share Market
One of the most common reason why people are motivated to enter stock market is due to the claims they see on social media of earning lakhs and crores of rupees. Unfortunately, many individuals jump into the market without any proper analysis, often investing in penny stock, which can lead to disastrous losses.
Journey Of trader
Through this blog, I will take you on a journey of the stock market, starting from the basic and progressing towards advanced stages of trading. We will learn the fundamentals, various types of analysis, as well as different techniques, patterns and strategies that I have acquired through my own experiences.
Financial education is an essential aspect of our lives that we often overlook. Investing and trading are critical components of financial education that people should understand, if not actively participate in. There are three primary objectives of financial education, akin to the preamble of the constitution. These objectives include earning money, managing money, and growing money steadily.
Financial Education of share market
Financial education has not received the attention it deserves from schools, colleges, or individuals. Therefore, it is crucial for every individual to personally undertake this task of financial education if they intend to grow financially.
Learning any subject requires effort, and the time dedicated to the subject is proportional to the level of learning achieved. With one hour of studying per day, a person can become an expert in a subject within five years give or take. However, this learning curve can be shortened if one is willing to dedicate more hours per day, wherein mastery of the subject can be achieved in as little as two years. People often assume trading and investing to be complex, as Warren Buffet once said, “There seems to be some perverse human characteristic that likes to make easy things difficult.” In the stock market arena, simple concepts work wonders if understood and practiced well. Simple approaches worked for me and that is exactly what I intend to share with my readers.
Short & Long Term Options for Investment
- Short Term:
- Savings Bank Account
- Money Market or Liquid Funds
- Fixed Deposit with Banks
- Long Term:
- Post Office Savings
- Public Provident Fund
- Bonds
- Mutual Funds
Mind Game Of Share Market
If I were to offer you a large sum of money, let’s say 5 Crores, your mind would immediately jump to how you would spend it. Only after that initial excitement would you begin to consider investing some of the money for the future. Some might argue that they would save the entire amount, but where would they keep it? Banks offer interest rates of only 3-6%, while fixed deposits might earn interest rates of 6-8%. Others may consider simply keeping the money in a safe at home, but what about inflation? Just like termites hollow out wood, inflation eats away at the value of money over time.
Inflation is a common and observable economic phenomenon. The prices of commodities you bought three years ago are likely much different than their current prices due to the declining purchasing power of money. So, how can we beat inflation? By making the right investments!
Success Investment
Success in investing begins with the ability to distinguish between the right investment opportunities and speculative ones. I often encounter people from all walks of life who have invested in various schemes and plans, ranging from unregistered real estate to ULIP policies and cryptocurrency. But is it enough to simply invest in anything? This question used to trouble me as well. I wondered endlessly how I could double my money through the right investments.
The answer lies in the Rule of 72. This formula is used to calculate how many years it will take to double your investment based on the annual rate of return. For example, if you are earning a 12% rate of return on your investment, it will take at least 6 years to double your investment (72/12=6). This minimum time period should ideally be 3-4 years. The goal of this book is to help you achieve this ideal return rate.
Start Investing in market
When I advise young people to start investing, they often complain that they don’t have much money to invest. But it’s important to start somewhere in order to grow and make money over time. Trading can even become a full-time profession, but it requires dedication and study. By devoting 4 hours per day to studying the subject, you can shorten the learning curve from 5 years to just 1 year. In the next chapter, we will delve into what to study in order to make the right investments.
FAQs
The stock market is a platform where investors buy and sell shares of publicly traded companies. It provides a venue for companies to raise capital by issuing shares and for investors to buy and sell these shares.
A share or stock represents ownership in a company. When you own shares of a company, you become a shareholder, and your ownership is proportional to the number of shares you hold.
To buy shares, you need to open a brokerage account. Once your account is set up, you can place buy orders for the shares of the companies you’re interested in through the brokerage platform.
Stock prices are influenced by various factors, including company performance, economic conditions, market sentiment, and global events. Supply and demand dynamics also play a crucial role in determining stock prices.
A bull market is characterized by rising stock prices, optimism, and investor confidence. Conversely, a bear market is marked by falling stock prices, pessimism, and a lack of investor confidence.
Referral Links
- https://blogverce.com/
- https://www.bankrate.com/investing/stock-market-basics-for-beginners/
- https://groww.in/p/stock-market-basics
- https://www.indiainfoline.com/knowledge-center/share-market/share-market-investment-guide-for-beginners
- https://www.5paisa.com/stock-market-guide/stock-share-market/share-market-basics
- https://www.angelone.in/knowledge-center/share-market/share-market-basics
- https://www.investopedia.com/articles/basics/06/invest1000.asp
- https://www.bajajfinservsecurities.in/what-is-share-market